Benefits of Limited Liability Partnership 

 Introduction 

Well, before launching any new business, the first question that each individual has in mind is “whether to form a private limited company, an LLP, or a partnership firm?” Well, there is no response to this question, and the answer will differ depending on the purposes and scale of activities to be carried out by the company. However, this blog can assist you in obtaining the answer because we will discuss what an LLP is and the benefits of incorporating as a Limited Liability Partnership in this content.

  

 What is a Limited Liability Partnership?  

A Limited Liability Partnership is a firm with at least two members (which can increase to five Designated Partners (without DIN)) and no limit on the maximum number of members. Members of an LLP have limited liability.

 

 Benefits of LLP 

Let us now see the benefits of registering your business as an LLP

1. In LLP, there is no minimum capital requirement. An LLP may be created with the least amount of money. Further, a partner’s contribution might include tangible, movable or immovable property, or intangible property.

2. When you incorporate the business as an LLP, the members are not liable for the loss incurred, debts owed, or payment due by the LLP because of the feature of limited liability.

3. When you register as an LLP, you only need 2 partners, and you can have as many as you like, as there is no limit specified.

4. In an LLP, each partner has the ability to govern the business entity and shape their position in business activities. The LLP partners have tremendous control over how the LLP should be handled. A managing partner or a committee made up of partners may be chosen by the LLP partners to oversee day-to-day company operations.

5. LLPs experience a lesser compliance burden because they only have to file two statements: the Annual Return & Statement of Accounts and Solvency. As a result, the yearly filing fee for an LLP is quite minimal.

6. When registering the LLP, the cost is minimal if we compare it to any other company (Pvt. Ltd. or PLC). Moreover, the registration process is completed in 15-20 days because of the straightforward and average time.

7. One more benefit of incorporating limited liability partnerships is that, like other companies, LLPs are not obligated or mandated to file tax audits. However, it is necessary in cases where annual contributions exceed Rs. 25 lakh and annual revenue exceeds Rs. 40 lakh.

8. As long as the partnership agreement permits it, new partners can join and long-term members can leave without disrupting the main business operation.

9. In any company, additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is paid if the owners choose to remove income from the company. However, in the case of an LLP, no such tax is payable, and the earnings of an LLP can be easily withdrawn by the partners.

 Conclusion 

An LLP business structure offers the benefits of limited liability for any business while still allowing partners flexibility in business operations. Changes in the partnership arrangement of the company have no impact on this business structure. This type of framework is best suited for partnership firms that provide services or operate in professional or technological domains.